Deregulation and Privatization of the Natural Gas Market in Italy

Abstract

In recent years consensus seems to have been reached on the necessity to introduce market elements and greater competition into the natural gas sector and to proceed with more significant deregulation. In countries such as the United Kingdom and Germany the drive towards market deregulation has been accompanied by reasonably extensive privatization of state enterprises. The European Union has formulated numerous proposals with regard to the deregulation of the services of public utility networks, and in particular those operating in the natural gas market which, if approved in their entirety, are destined to significantly modify the current structure of the sector, and in particular the transport and distribution phases. These guidelines entail norms aimed at guaranteeing cost transparency in the distribution of gas, encouraging the transportation of natural gas by means of large networks, assuring conditions of transparency and non-discrimination in the issuing of exploration permits to locate and extract hydrocarbons. The steps proposed by the European Union are aimed at the creation of an integrated internal natural gas market governed by common rules which will guarantee a stable gas supply and promote competition and efficiency in the sector. More precisely the goals of these proposals are 1) to separate, at least on an administrative and management level, the production and distribution processes in order to guarantee cost transparency in the various phases of gas supply; 2) to permit access by third parties to large pipeline networks; 3) to fix service requirements with regard to quality and prices; 4) to establish transparent and non-discriminatory authorization for the construction of pipelines and the management of transport and distribution; and 5) to create a Trans-European Network (TEN). In general, while the accent is being placed on the necessity to implement policies of deregulation, no specific mention is made of plans to abolish public utilities.

The authors, respectively research economist at the Centro Studi Confindustria and post-graduate scolar at ISTAO, wish to thank Ms. Anna Maria Tibuzzi of the ENI library for the documentation made available, and Mr. Carlo Briotti for the useful comments received. The opinions expressed by the authors are not necessarily shared by their respective employers, and the authors accept responsibility for eventual errors and omissions.